XAU/USD daily overview

The yellow metal was stranded between the bounds of the 55– and 100-hour SMAs during the first part of Monday. A strong hourly surged mid-session allowed XAU/USD to breach the latter and move towards the 200-hour SMA and the upper boundary of a three-week channel down circa 1,330.00.

However, the pair’s movement after breaching the line has been sideways, thus suggesting that it might not be able to overcome its nearest resistance. In addition, the formation of a minor rising wedge should result in a southern breakout. This bearish move should not be long-lived, as the rate is supported by the 55– and 100-hour SMAs at 1,320.00. Gold should subsequently edge higher and try to re-test the 1,330.00 area.

Gains should be capped at the 23.60% Fibo and the monthly PP at 1,336.00.

Kommentar:

Contrary to expectations, the upper channel boundary and the 200-hour SMA near 1,328.50 did not provide enough resistance to pressure the rate south on Tuesday.

The pair remained sticky to this cluster, thus providing and early indication of the likely breakout north, even despite signals technical signals pointing to the prevailing bearish sentiment. By Wednesday morning, the yellow metal had reached the monthly PP, the weekly R1 and the 23.60% Fibo retracement circa 1,337.50.

The base scenario favours the pair edging lower during the following trading hours just to make a rebound from the breached channel. Subsequently, the 200-hour might successfully support the pair and thus allow for a continuous surge, setting the 1,347.50 mark as today’s high.

Kommentar:

Gold spent the first part of Wednesday’s trading session calmly, as it managed to reverse the from 23.60% Fibo retracement and approach the upper boundary of the breached three-week channel.

The better-than-expected US CPI had an immediately positive impact on the Greenback, as it managed to push the rate as low as the 1,317.50 mark. However, the 55– and 200-hour SMAs proved to be strong support, thus allowing for the yellow metal to surge up to a new February high of 1,355.00.

The Asian session started with no changes to the exchange rate, thus suggesting that bulls might finally be ready to surrender their positions. The nearest resistance is the weekly R2 at 1,361.90, while two strong support clusters are located at 1,338.00 and 1,328.00.

Kommentar:

Following the massive hourly advance mid-Wednesday, the yellow metal has made no significant changes to its price level, thus remaining in the 1,350.00/1,360.00 range ever since.

If looking at the chart, the pair has been moving neatly along the bottom boundary of the breached two-month channel. Technical indicators demonstrate that Gold has still some upside potential that could be realised today. However, the commodity was reluctant to push higher during the previous session. Thus, gains could also be limited today, especially if taking into account the fact that the pair is located near the 2017/2018 high of 1,365.00.

It is likely that US Building Permits released at 1330GMT introduce some volatility in the market; however, Gold should maintain its trading range between 1,365.00 and 1,340.00.